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    COVER STORY: Diversified investment

    Diversity management is evolving from the right thing to do into a competitive advantage.

    By Jenny McTaggart

    It's more likely than not that if you're reading this magazine, you're a white male. It's a fact that the supermarket industry, like many other businesses in America, is peopled primarily by white men, especially at the corporate executive level.

    The numbers speak loudly: The food production, food wholesaling, and food and drug retailing segments all rank below the Fortune 500 in gender diversity, with only 7.1 percent, 11 percent, and 11.7 percent of corporate officer positions, respectively, held by women in those segments, according to a new white paper published by the Network of Executive Women. Ethnic minorities seem to have fared a little better: Their share of senior management jobs in the past decade has moved up to 16.7 percent from 13 percent.

    But this massive underrepresentation of women and people of color is on the brink of change, due to a number of converging circumstances -- chief among them the increasingly diverse makeup of the U.S. population, and the growing recognition among executives that diversity makes for better business.

    By 2008 70 percent of new entrants to the work force will be women, persons of color, or both, according to the U.S. Department of Labor. Smart businesses realize the value of having a more diverse work force. Particularly in the supermarket industry, where at least 80 percent of primary shoppers are women, having more than one viewpoint is competitive ammunition.

    If supermarket companies don't make efforts to court diverse employees, other industries increasingly will. "Chances are that women and people of color will have three or four job offers on the table at a time [by 2008]," notes James Sturgis, director of supplier diversity at Ahold USA. "Those individuals are going to look for companies that are accepting of them, that engage them."

    Ahold is among a growing number of retailers that are taking steps to ensure they're moving toward a more diverse enterprise -- from their store management pools to corporate leadership to the suppliers represented on their grocery shelves and in their back offices. Such companies, which also include Albertsons, Food Lion, and Bi-Lo, are honing supplier diversity programs, sponsoring companywide affinity or networking groups, making internships more diverse, and, most important, more aggressively recruiting women and people of color.

    Ahold's Sturgis uses the analogy of a "four-legged stool" to describe the components that complete a picture of corporate diversity in the supermarket industry. The four legs are work force diversity, multicultural marketing, community diversity, and supplier diversity. Clearly, each one has a big impact on the others.

    Culture of inclusion

    For these companies, management diversity isn't about meeting a quota -- it's about pursuing an inclusive culture where newcomers feel welcome, and everyone sees the value of his or her job. As Marcia Williams, Albertsons' v.p. of corporate diversity, puts it: "Continuing to integrate diversity into our company's DNA is an ongoing journey."

    Increasing numbers of independent retailers seem to recognize the value of diversity, too. Paulo Goelzer, president of the IGA Coca-Cola Institute, says IGA members are including diversity in entry-level training, and his group now offers training materials in Spanish. He also notes that women now account for nearly half of the attendees at the IGA Coca-Cola Institute Supermarket Operations classes.

    Not every industry observer claims to see signs of progress. The critics say that compared with other industries, the grocery industry has a lot of catching up to do.

    Luke Visconti, partner and co-founder of New Brunswick, N.J.-based DiversityInc, says grocers appear to be "asleep" on the issue. "They stand a very good chance of being taken out by companies that are aggressively pursuing strategic diversity management, such as Wal-Mart." Only two retailers of any kind made his company's annual list of the top companies for diversity in 2005: Wal-Mart (No. 29) and Staples (No. 41).

    Others would beg to differ. One source who's knowledgeable about industry executive recruitment trends says that the "pendulum has swung the other way" since the days of virtually all-white executive pools in supermarkets. The source, who asked not to be named, says that now women and minority candidates have a better chance of being hired for executive-level positions than middle-aged white men.

    And according to an executive recruiter, more women and minority candidates from outside the industry seem to be willing to fill executive positions at supermarket companies. "I recently placed a woman, who had been a chief officer for a clothing chain, in a supermarket position," says Brian Wright, managing partner of Executive Leadership Solutions, a permanent placement firm based in Ft. Meyers, Fla. that recruits for the supermarket, convenience, and travel center industries, as well as their suppliers.

    Wright's clients, whom he considers to be the "more progressive operators," are eagerly accepting these candidates, he notes. "I don't hear them saying this is because it's politically correct. They see it as a value to the organization if their work force more closely represents their customer base."

    Diversity as a business case

    There are a number of reasons that "diversity" and "inclusion" are industry buzzwords.

    One factor is that retailers are focusing on neighborhood marketing more than ever, and with that comes a preference for staffing their stores with associates who mirror the communities they operate in. As some operators move back into urban areas, they'll be hiring more African-Americans, Hispanics, and members of other ethnic groups. These employees are also seen as invaluable assets to help assure that retailers have the right product mix for their diverse shoppers.

    Another force for increased diversity is the industry's own diversity-focused mentoring group, the Network of Executive Women. In recent years, attendance at the group's networking events, award presentations, and other events has significantly increased.

    Perhaps the most influential factor behind the diversity movement today, however, is the business argument. Solid numbers backing up the case for diversity as a sales- and profit-building strategy are largely lacking, but testimonials in favor of the movement are piling up from high-level executives representing virtually every segment of the food industry.

    "I believe that companies that figure out the diversity challenge first will have a competitive advantage," said PepsiCo chairman and c.e.o. Steve Reinemund in a recent article in The Wall Street Journal. PepsiCo attributed one percentage point of its 7.4 percent revenue growth in 2003 to new products inspired by diversity efforts. The food industry giant placed fourth on DiversityInc's list of the best companies for diversity in 2005.

    Like PepsiCo, the top brass at Ahold USA has fostered diversity initiatives -- a crucial component of any successful diversity management strategy, according to the experts. For years the catalyst for that has been Bill Grize, who recently retired as president and c.e.o. of Ahold USA. Grize displayed a "real passion" for making the business more diverse, according to Emerson Foster, director of talent acquisition for Stop & Shop/Giant.

    "Back in the mid-1990s, Stop & Shop was building more stores in urban areas," recalls Foster. "We made sure we were casting the net as wide as possible to staff those stores, and wanted to do right by the communities in which we operated. Bill Grize's vision and leadership during that time really allowed us to gain a strong focus. You have to walk the walk, and Bill definitely did that."

    As the company staffed its growing store count, it added more management-level positions within those stores, as well. That gave Stop & Shop an opportunity to give new employees more responsibility and a better career opportunity, says Foster. "More than 200 assistant store management jobs were open, and we went headstrong to make sure we had a significant impact in bringing in women and people of color. In fact, in that group of 200-plus positions, we recruited more than 50 percent women and people of color. We really looked at that as an opportunity to start changing the makeup of our business."

    The focus on diversifying store operations extended to the corporate level, too. "We tried to go after both levels as far as recruiting, although I'd say we may have had more impact at store level," notes Foster.

    As the company entered more urban areas, it also worked to build strong relationships in its new communities. Stop & Shop developed an internship program that focused on students of color, and struck up relationships with many community colleges in its trade areas. "The internships really focused on bringing in high school and college students who are starting to think about career aspirations, but haven't formed a strong opinion yet about where they want to work."

    Grocery as a career

    One of the retailer's challenges was that people of color didn't necessarily see the supermarket industry as a destination point. That's why it was so important to have minorities represented in management positions in stores where these students live, explains Foster. "We decided we wanted to convert 80 percent of the interns to employees upon graduation from college. Since 1999 we've met or exceeded that goal every year."

    Ahold's partnerships with community groups and organizations such as the NAACP and the Urban League have yielded great dividends in this initiative, according to Foster. Stop & Shop has built relationships with smaller groups, too, such as the New Hampshire Cultural Diversity Council (NHCDC).

    "New Hampshire's population of color has probably grown at a faster rate than the overall population," he explains. "The group brings in middle-school students to a ski resort around Martin Luther King Jr.'s birthday, to conduct cultural diversity awareness training. We work with them and provide trainers. Our folks have done a great job in putting that program together."

    Another way Stop & Shop has gotten its name out in more diverse communities, such as Boston's Roxbury neighborhood, is by advertising job openings in the Bay State Banner, an African-American-run community newspaper in Boston. The retailer even profiles one or two of its current minority employees in the paper.

    "We want the community to see that we have people like them in every area of the business," notes Foster.

    Internally, Stop & Shop's minority employees meet frequently in informal settings, to discuss their jobs and the company. The diversity roundtables, as they're called, started in 1997 when five African-American employees got together for dinner and talked about how they could help the company to become more diverse.

    "We wrote up the minutes from the meeting and sent them to Bill Grize," says Foster, who was one of the attendees of that initial meeting. "We told him we were going to meet once a month. He said he wanted to meet with us, and that's basically how the roundtables were started."

    Grize's enthusiasm is shared by Marc Smith, c.e.o. of Stop & Shop/Giant of Landover, according to Foster. "Their styles are different, but the support is definitely the same. Both Grize and Smith have recruited folks of color to this business, whether it was individuals they met in trade shows, airplanes, or restaurants. I don't know if many companies can say the same."

    'Creating systemic change'

    Food Lion, the Salisbury, N.C.-based subsidiary of Delhaize America, can certainly speak about diversity initiatives: The company has been tackling the diversity challenge for a decade; and, like Ahold, has benefited from the passion of its leader, president and c.e.o. Rick Anicetti, who leads an executive-level diversity and inclusion council in the company.

    "The definition of diversity at Food Lion is 'acknowledgement and respect for all,'" explains the company's v.p. of diversity and inclusion, Eric Watson. "We're much more focused today on diversity and inclusion, relative to the fact that diversity as a business strategy is leveraged through an inclusive working environment and shopping experience.

    "This work should be about creating systemic change," continues Watson. "It's critical that both the organization and the exterior community see it as something that's important. It should be something that you are, not a flash in the pan. It becomes the responsibility of all the associates, and clearly of the management."

    One of the latest initiatives in Watson's plan to "move down the continuum of becoming an inclusive organization, long-term" is cultural competency, in which employees understand who they are, how they work with others, and the customers they serve. "To help measure that, we're establishing an external diversity and inclusion council, which will represent individuals outside the company who can tell us things we may not see and hear. This will help us think in a proactive way and will keep us sharp," explains Watson.

    Talent planning and development are also on Watson's radar. "The overall strategy is to make sure our talent bench is developed to understand how to create a diverse and inclusive environment."

    To foster that same diverse environment in its stores, Food Lion is encouraging its employees to participate in ESL (English as a Second Language) and SSL (Spanish as a Second Language) classes. Some of the retailer's managers are already bilingual, but for others, the growing Hispanic population in Food Lion's marketing territory makes speaking both languages a key advantage at store level.

    Food Lion's employees also participate in business resource groups, or networking groups, that bring together employees who have similar backgrounds. These networks include Asian-Pacific employees, African-Americans, Hispanics/Latinos, women, people with disabilities, and GLBT (gay/lesbian/ bisexual/transgender) folks. There's even a group for white males.

    Reaching outward, Food Lion has established strong philanthropic relationships with groups such as the NAACP, the Urban League, Rainbow Push, the Human Rights Council, and Latino Diamante. The retailer's relationship with CIAA (Central Intercollegiate Athletic Association), made up of historically African-American colleges and universities, has provided some great candidates for its retail management-training program. "To date, we've recruited about 16 people from those schools," says Watson.

    Boise, Idaho-based Albertsons' strategy to promote diversity follows similar lines. The retailer now has more than 30 affinity groups that provide a support system and positive forums for personal and professional development. The initiative includes a women's network, as well as African-American, Hispanic, and Asian-American groups.

    Additionally, Albertsons offers comprehensive mentoring. "Just recently we deployed our online mentoring tool, which facilitates mentoring relationships face to face or virtually," says Williams, the chain's corporate diversity executive. "This tool gives us the ability to match women and/or minorities who work in different geographic divisions of our company."

    Albertsons also offers career development and succession planning, which help the company identify and cultivate female and minority associates with high potential, and prepare them for leadership positions.

    The retailer is becoming more proactive in finding, hiring, and retaining diverse talent, notes Williams. "We're constantly seeking high-talent, diverse employees to drive our business. More effective metrics are being implemented to better manage filling our talent needs. We've partnered with Careerbuilder.com, which provides specialty diverse Web sites, enabling us to quickly market our open positions to diverse job seekers."

    At the top, Albertsons has won recognition for its diverse board of directors. Six of the company's 11 board members are women, a fact that earned it the top ranking for female board representation out of Fortune Global 200 companies in 2004.

    "We believe this recognition, combined with our companywide initiatives, provides our company with a competitive advantage," says Williams.

    Mauldin, S.C.-based Bi-Lo, which was formerly owned by Ahold and now independently operates the Bi-Lo and Bruno's chains, is working to build its own competitive advantage in the intensely competitive Southeast market, with initiatives that focus on work force and supplier diversity, as well as community outreach.

    Building a mixed management team is particularly challenging in the supermarket industry, because many from the existing executive talent pool have grown through the ranks and thus are products of the industry's homogenous legacy.

    "In the grocery industry, as in a lot of industries, it's difficult because a lot of high-level execs started out in the business," confirms Magaly Penn, Bi-Lo's senior director of diversity, whose own background is in the foodservice business. "As a result there wasn't a big talent pool [of minority candidates]. We've tried to identify women and people of color who have potential, and then guide them through the ranks to management."

    Bi-Lo president and c.e.o. Dean Cohagen has been a huge supporter of diversity, according to Penn. Several years ago he challenged the company to make its management training, called B School, at least 40 percent diverse. "We achieved over 60 percent the first year, and are still tracking more than 50 percent," she notes. "That's the pool that will move into regional v.p. roles and district management."

    Bi-Lo has numerous affinity groups, too, in each of its three operating regions. "They meet monthly and share with us the challenges they face. They help us recruit and work through the challenges," explains Penn.

    Several Bi-Lo executives sit on the boards of groups such as the Urban League and the United Way. They also work with local schools and offer two minority scholarships in each of their trade areas. Additionally, Bi-Lo sponsors events that tie into ethnic communities, such as a Hispanic soccer tournament in Chattanooga, Tenn.

    A world worth working for

    Many observers have said that one of the biggest challenges facing the supermarket industry is whether it can present itself as a viable career option. The job becomes even tougher when it comes to attracting talent that may not have felt so welcome in the past.

    "Many people of color, especially in the Northeast, are recent immigrants. I'm Jamaican, and if I had told my mother I'd be working for a grocery chain upon graduation from college, she'd have told me I was crazy," notes Stop & Shop/Giant's Foster. "We need to do a better job of letting people know this is a bona fide opportunity.

    "If companies aren't building stores where people are, developing relationships to tell people about career opportunities, having supplier diversity initiatives, and becoming involved in outreach to their communities, they're losing out," he says.

    For those retailers that are taking steps now to ensure a more diverse work force tomorrow, chances are that their investments will pay off handsomely.

    By Jenny McTaggart
    • About Jenny McTaggart

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